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Santa Rosa may sell a 140-space parking lot to a developer interested in building a major mixed-use apartment project downtown.

The City Council agreed Tuesday evening to enter into exclusive negotiations with Cornerstone Properties to consider selling the 1.5-acre parking lot at 521 Fifth St.

The Petaluma-based real estate development and management firm owns the adjacent 1.4-acre property at 427 Mendocino Ave., which houses The Press Democrat headquarters on the second and third floors and a temporary local assistance center on the ground floor.

If it acquired the neighboring parking lot across B Street from Macy’s, Cornerstone Properties would control a combined 3-acre downtown development site that would be the largest of its kind in the city.

No precise proposal is on the table, but with zoning that allows 10-story buildings, dozens if not hundreds of new housing units are potentially in play. The prospect of such a large number of new apartments, including a significant number of affordable units downtown, plus additional retail or office space and parking, clearly thrilled council members.

“I really see this as a potential game-changer for downtown,” Councilman Tom Schwedhelm said. “It’s very exciting for me.”

While no plan will be proposed unless negotiations prove fruitful, the broad strokes emerged Tuesday. The city would require at least 80 percent of the parking lot property be used for housing, and 40 percent of that would be affordable.

In addition, the city would require the developer replace the 140 parking spaces it would lose if the property were developed.

The project is similar to efforts in the mid-2000s to sell the 1.3-acre parking lot on E Street downtown known as the White House site, named for the department store there for 117 years before it was razed in 1985. The city struck a deal with a developer to build a large parking garage, boutique hotel and residential development on the site that they hoped would be a catalyst to generate nightlife downtown.

But the combination of shifting political winds and a bruising recession killed the project.

Peter Stanley, president of ArchiLogix, is advising Cornerstone in the negotiations, and said he will conduct an analysis of the housing market, site conditions and mix of units sought by the city to determine if a project involving the parking lot site makes sense. Smaller downtown infill properties can be difficult to financially justify, Stanley said, but it’s possible the larger site, combined with the 10-story height limit downtown, can make such a project viable.

Vice Mayor Chris Rogers said he was a bit concerned that instead of entertaining multiple development offers, the city was opening exclusive negotiations with a single developer. But David Guhin, director of economic development and housing, said it was a unique case brought about by the fact that the city lot and existing Cornerstone property are adjacent.

“We wanted to try something different on this site because of the potential we could leverage,” Guhin told the council.

The council approved a 180-day negotiation period, that can be extended by the city manager at his discretion.

You can reach Staff Writer Kevin McCallum at 707-521-5207 or kevin.mccallum@pressdemocrat.com. On Twitter @srcitybeat.